Posts Tagged ‘Pebble Beach’

UK-based Vislink plc, which owns broadcast industry brands Advent, Link, MRC Gigawave, and Pebble Beach, announced results for the first half of 2016. 1H 2016 revenue was £22.6 million, a decline of 15% versus the first half of 2015.

Vislink was anticipating challenging results for the first half of 2016 having published a negative trading update on July 6, 2016. The trading update warned sales in Vislink’s Communication System (“VCS”) business were below management expectations. In addition, the July update indicated the further restructuring of VCS would necessitate a non-cash write-off of £6 – £9 million and additional annual cost reductions of £1 – £2 million. This adds to last year’s restructuring of the division when headcount was decreased 26% and a £2.5 million charge was incurred.

The underperformance of VCS caused Vislink to consume its entire banking facility and will subsequently force Vislink to breach its debt covenants. Once Vislink is officially out of compliance with its financing arrangements, the Company’s bankers may call for repayment of existing loans – which Vislink does not have the cash to repay. While this represents a material uncertainty for the Company, Management did indicate it is engaged in constructive discussions with its bankers.

In order to improve cash generation, Vislink’s management is canceling the Company’s dividend until debt drop below EBITDA, canceling its equity incentive program for senior management, and will “continue to examine the appropriateness of the Board and Group structure.”

The announcement has resulted in a greater than 50% decline in Vislink’s stock price decline from close on September 29, 2016. Measured against Vislink’s 52 week stock price, the decline is greater than 75%.

Net loss for the first half of 2016 was £32.2 million or 26.9p per share, compared to a net loss of £0.9 million or 0.4p per share in the year-earlier period.

1H 2016 operating loss was £32.0 million versus an operating loss of £0.8 million during 1H 2015. Operating losses included non-cash write downs of £23.3 million for goodwill and acquired intangibles as well as a write-down of £6.3 million of inventory and capitalized development costs.

A majority of Vislink’s goodwill write-down was associated with the Broadcast division (excluding Pebble Beach). The entire £20.6 million of goodwill for Vislink’s Broadcast division was written down.

Given the magnitude of the non-cash items it is informative to review operating cash flow for the period. During the first six months of 2016 operating cash usage was £1.2 million, compared to generation of £0.8 million during the first half of 2016.

The results for the first half benefited from a positive £2.2 million foreign currency translation based on a weaker GBP.

Broadcast Performance:

Vislink’s broadcast revenue for the first half of 2016 was £20.6 million, a 7.6% decrease versus broadcast revenue in 1H 2015. The decline was primarily related to an 18.5% year-over-year drop in the revenue of Vislink’s Communication Systems (“VCS”) business.

Management attributed the decline in VCS to a combination of a general pause in spending ahead of the adoption of next-generation technologies and a reduction in spend from broadcasters driven by a diversion of budgets from infrastructure to investing in content.

Pebble Beach revenue for 1H 2016 was £5.4 million, a slight decrease of 1.4% when compared to the first half of 2015. In the commentary accompanying the earnings release, the Company highlighted a 53.3% growth in Pebble Beach’s order book to £5.4 million during the 1H 2016 (1H 2015: £3.5 million).

Revenue by Region:

Revenue from the UK & Europe region was £7.6 million during the first half of the year, an increase of 20.1% over the first half of 2015. The UK & Europe represented 33.6% of total revenue for the first six months of the year, versus 23.7% in the same period of 2015.

Revenues from the Americas were £7.9 million, a 27.4% decrease against 1H 2015. On a percentage basis, Americas was 35% of total revenue for the first half of 2016, down from 40.6% in 1H 2015.

First half 2016 revenue from the Middle East and Africa (MEA) was £3.2 million, down 3.2% versus 1H 2015. The MEA region represented 14.2% of revenue in 1H 2016, up from 12.4% during the first half of 2015.

APAC revenue in 1H 2016 was £1.9 million, up 4.1% versus the comparable 2015 period. APAC revenue was 8.4% of total revenue in 1H 2016, up from 7.1% in 1H 2015.

Operating Expenses by Function:

R&D expenses recognized in 1H 2016 were £3.6 million, a 29.5% increase over 1H 2015. As a percentage of revenue, R&D expense was 16.1%, a substantial increase from the 10.6% in 1H 2015. During the first half, Vislink wrote down £0.8 million of capitalized R&D investment. Management did not identify the associated products or technologies associated with the write down.

Sales and marketing (S&M) expenses were £4.6 million, a slight rise of 1.4% against 1H 2015 S&M expense level. On a percentage basis S&M was 20.2%, an increase over the 17.0% of revenue from 1H 2015.

Administrative expenses were £2.9 million, a decrease of 28% versus the first half of 2015.

Cash and Debt Levels:

Vislink had a cash balance of £3.1 on June 30, 2016, down from £3.2 at the end of 2015. During the same time period, the Company’s debt balance increased to £12.0 million from £9.0 at the end of 2015. These developments have increased Vislink’s net debt to £8.8 million. This compares to net debt levels of £5.7 million at 2015 year end and £1.2 million at the end of the first half of 2015.

In the release Management indicted debt has increased further since the end of the June and Vislink is now using its entire Revolving Credit Facility of £15.0 million.

Business Outlook:

Vislink’s order book at June 30, 2016 was £11.4 million, an increase of 60.5% over the same date last year.

In their prepared remarks Management discussed the organic growth of Pebble Beach, its pipeline of software bolt-on acquisitions, and its continued focus growing Vislink’s software business. The below slide is taken from the Vislink’s presentation on the first half results.

“We continue to see significant underlying organic growth in our software business with a strong order intake which has carried through into H2. The long term prospects for Pebble Beach Systems continue to improve as we augment our core enterprise software solutions with cloud enabled software applications. We also have a pipeline of partners and software bolt-on acquisitions which will further enhance the Group strategy of building a high margin, cash generative software business” said John Hawkins Executive Chairman of Vislink.

We have been publishing the BBS Reports since 2009. Each new edition is created through several months of research, including interviews with technology end-users, global surveys of technology decision makers, analysis of the end-user responses, and visualization of the data collected. Now in its eighth year of publication, the BBS remains the most comprehensive annual study of technology end-users in the global broadcast and media technology industry. Nearly 10,000 technology professionals in 100+ countries participate in the BBS each year, making it the largest market study of the media technology industry.

Based on feedback from technology vendors, media companies, and investors, we have updated the vendors, product categories, and market trends profiled in the 2016 BBS to better align with recent market developments.

Select updates include the global tracking of IP Standard Adoption, a product level review of the 4K upgrade cycle, and planned usage of programmatic advertising exchanges.

The continual updates over the past eight years have helped the BBS reports remain a critical reference for industry executives to improve strategic decision-making, customer engagement, marketing strategy, product planning, and sales execution. In addition to technology vendor and service provider strategic planning, BBS reports are also used frequently for M&A and investment activities by both buyers and sellers.

Three types of 2016 BBS reports are available:

2016 BBS Global Brand Reports: provides deep insight into how each more than 100 broadcast technology suppliers (see full list below) are perceived by market participants, along with comprehensive benchmarking of broadcast technology vendors on a wide variety of metrics

The revenue decline was attributable to Vislink’s surveillance business, which completed a large one-time order in the first half of 2015.

Net income for 2015 was (£0.9) or (0.7p) per share, compared to net income of £3.7 or 3.2p per share in 2014.

2015 operating income was (£0.8) versus operating income of £5.5 during 2014. It is important to note management capitalizes a portion of R&D expense, which is therefore not reflected in the current period’s operating expenses and instead amortized over future periods.

R&D expenses recognized in 2015 were £5.8, a 3.6% increase over 2014. As a percentage of revenue, R&D expense was 10%, a slight increase from the 9% in 2014. The increase was attributable to the addition of a full 12 months of Pebble Beach (acquired in March of 2014).

Sales and marketing (S&M) expenses were £9.4, a rise of 6.8% against 2014 S&M. On a percentage of revenue basis S&M was 16.3%, an increase over the 14.2% of revenue from 2014.

Administrative expenses were £6.1, a decrease of 10% versus 2014 levels. The decrease in administrative expenses was the result of a restructuring of the Vislink Communications Systems division.

Headcount for the Communications System division decreased from 250 at the end of 2014 to 185 at the end of 2015 – a 26% decline for the year. The Company incurred a charge of £2.5 related to the restructuring.

In contrast, the headcount of Vislink’s Pebble Beach increased from 63 at the start of the year to 75 at the end of the year.

Vislink ended 2015 with a cash balance of £3.3, down from £8.4 at the end of 2014.

Broadcast Performance:

Vislink’s broadcast revenue for the 2015 year was £50.2, a 9% increase versus broadcast revenue in 2014. The gain was primarily related to the inclusion a full 12 months of Pebble Beach.

Pebble Beach revenue for 2015 was £10.9 million. Vislink acquired Pebble Beach in March of the 2014, so year-over-year comparisons are not appropriate. During the earning release, management highlighted a $2.0 million (USD) order received from Scripps Group in 2015.

Broadcast revenue for Vislink’s Communications Systems division was £39.3 million for 2015, an increase of 4% over the prior year.

Broadcast Regional Performance:

The table below from Vislink’s earning release shows a complete breakdown of the Company’s broadcast revenue by geographic region.

Business Outlook:

In a December 8, 2015 press release Vislink had alluded to an upcoming acquisition, stating “the Company is in advanced discussions with a small bolt-on acquisition, which would provide software to broadcasters and be highly complementary to Pebble Beach Systems’ existing broadcast solutions.” There was no acquisition announcement as part of Vislink’s release.

Executive Chairman of Vislink, John Hawkins said “We continue to transition to a software and services business represented by the evolving profit mix within the business. Pebble Beach Systems has had a strong financial performance in 2015 as it continues to expand its sales activities through its key partnerships and increasing geographic presence. In its core broadcast markets Vislink Communication Systems found market conditions in 2015 challenging and they are expected to remain variable in 2016. However, the significant restructuring of Vislink Communication Systems, coupled with the investment and launch of new products and an increasing order pipeline, provides an encouraging platform for improved results from Vislink Communication Systems.”

The 2015 Big Broadcast Survey (BBS) Reports have now been published and are available from Devoncroft Partners.

We have been publishing the BBS Reports since 2009. Each new edition is created through several months of research, including interviews with technology end-users, global surveys of technology decision makers, analysis of the end-user responses, and visualization of the data collected. Now in its seventh year of publication, the BBS remains the most comprehensive annual study of technology end-users in the global broadcast and media technology industry. Nearly 10,000 technology professionals in 100+ countries participated in the 2015 BBS, making it once again the largest market study of the media technology industry.

Based on feedback from technology vendors, media companies, and investors, we have updated the vendors, product categories, and market trends profiled in the 2015 BBS to better align with recent market developments.

These updates help ensure the BBS reports remains a critical reference for industry executives to improve strategic decision-making, customer engagement, marketing strategy, product planning, and sales execution. In addition to technology vendor and service provider strategic planning, BBS reports are also used frequently for M&A and investment activities by both buyers and sellers.

Three types of 2015 BBS reports are available:

2015 BBS Global Brand Reports: provides deep insight into how each more than 100 broadcast technology suppliers (see full list below) are perceived by market participants, along with comprehensive benchmarking of broadcast technology vendors on a wide variety of metrics

UK-based Vislink plc, which owns broadcast industry brands Advent, Link, MRC Gigawave, and Pebble Beach, announced that its total revenue from continuing operations for the first six months of 2014 was £27.1m, down 3.2% versus the same period a year ago.

Pre-tax profit for 1H 2014 was £2m, up from a net profit of £1.4m during the same period a year ago.

Broadcast Performance:

The company’s broadcast industry revenue for the first half of 2014 was £21.1m, down 10.2% versus the first six months of 2013. Vislink attributed the lower year-on-year broadcast revenue to market uncertainty and longer decision making cycles.

Broadcast orders during 1H 2014 were £21.5m, down 22.9% versus the first six months of 2013.

In the 3.5 months since it was acquired, Pebble Beach contributed £3.1m, and generated an adjusted operating profit of £1.1m. The company said that Pebble Beach “is developing very quickly and continues to trade ahead of our expectations at the time of acquisition.”

Following on from the success of the Pebble Beach deal, Vislink telegraphed to the market its intent to make more acquisitions in the future, saying its move to the AIM stock market “has simplified and reduced the financial burden of making acquisitions, giving us continued benefits for bolt-on acquisitions.”

“Whilst the broadcast market has been challenging for our hardware business, overall, we are encouraged with these results,” said Vislink Chairman John Hawkins. “We have taken timely action to reduce costs in our Hardware Division and we have seen an improved trading trend, the order book strengthened in Q2 and the orders to sales ratio is better than 1.

“We are delivering on our software strategy with Pebble Beach Systems performing ahead of expectations. The Group’s revenue has benefitted from the change in revenue balance, with software providing longer term visibility. The partnership with Harmonic Inc, which is being announced later today, represents further excellent opportunities for the Group.”

The company ended 1H 2014 with £7.7m of cash. There was a net cash inflow from operating activities in the period of £5.5m, up significantly from £1.6m for the first half of 2013.

Under the terms of the OEM deal, Harmonic will place an initial order for software licenses of £2.0m, receivable in 2014, to secure Pebble Beach Systems’ products for onward sale in its integrated package.

Vislink says the deal with Harmonic “should contribute to improved profitability and penetration of Pebble Beach Systems software globally in the second half [of 2014].”

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Outlook:

Vislink said it has “an improved outlook for the broadcast market,” and anticipates improved trading in the second half of 2014.

For the past several years, Vislink has told the market its goal is to increase its revenue to £80 million, with 10% return on sales.

However, in its latest earnings announcement, the company has changed this position slightly, saying “As the proportion of our business coming from higher margin software becomes more significant, the target revenue needed to generate our long stated operating profit target will change. The Company remains committed to its target operating profit of £8.0m through both organic growth and bolt-on acquisitions.”

“2014 represents a transitional and transformational year for the Group and with the increasing focus on our software division, we believe that this will enhance the Group’s overall quality of earnings in 2014 and beyond,” said Hawkins.

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Related Content:

Press Release: Vislink plc half year results for the six months ended 30 June 2014

Under the terms of the OEM deal, Harmonic will place an initial order for software licenses of £2.0m, receivable in 2014, to secure Pebble Beach Systems’ products for onward sale in its integrated package.

Vislink says the deal with Harmonic “should contribute to improved profitability and penetration of Pebble Beach Systems software globally in the second half [of 2014].”

“This agreement is another key strategic partnership for Vislink and reinforces our strategy of moving into software and providing customer centric, solution-led and best-in-class products which enable Vislink to successfully capture new expanded markets,” said Vislink Executive Chairman John Hawkins. “This agreement will also provide significant new channels to market for our software solutions. We are delighted to welcome Harmonic as a partner and shareholder.”

“We are pleased to seal this strategic partnership with Vislink and become aligned with their interests as a shareholder,” said Harmonic SVP Peter Alexander. “We are both innovation leaders in video, and see significant synergy across our customer base and product lines. Together we can grow market share and broaden our addressable markets globally.”

After months of data collection, analysis, and visualization, we have now completed work on the 2014 Big Broadcast Survey (BBS). Reports from this study have now been published and are available from Devoncroft Partners.

If you’re not familiar with the BBS, it’s the most comprehensive annual study of technology end-users in the global broadcast industry. Nearly 10,000 broadcast professionals in 100+ countries participated in the 2014 BBS, making it once again the largest market study of the broadcast industry.

BBS reports have been designed to help readers improve their strategic decision-making, customer engagement, marketing strategy, product planning, and sales execution. BBS reports are also used frequently for M&A-related activities by both buyers and sellers.

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Three types of 2014 BBS reports are available:

2014 BBS Global Brand Reports: provides deep insight into how each more than 100 broadcast technology suppliers (see full list below) are perceived by market participants, along with comprehensive benchmarking of broadcast technology vendors on a wide variety of metrics.

2014 BBS Global Market Report: provides detailed information about industry trends, major projects being planned, products being evaluated for purchase, current and future plant infrastructure, broadcast technology CapEx budgets, and planned deployment of new technologies including 4K, Connected TV, and Social TV.

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If you would like information about these reports and how they can help your business, please get in touch.

In addition to these paid-for reports, we will also be publishing highlights from the 2014 BBS on the Devoncroft website. These articles will be posted on a semi-regular basis, so please check back often.

To receive posts when they are published, just enter your email in the box in the upper right-hand corner of the page.

The tables below show the product categories and broadcast technology vendor brands covered in the 2014 BBS.

2013 operating profit of $7.1m (£4.3m), an increase of 40.3 per cent increase compared to 2012

Gross margins were 40.6% in 2013, up from 39.4% in 2012

Order intake for the year was $99.6m (£60.1m), and the company ended the year with an open order book of $9.3m (£5.6m), up 7.7% versus the end of 2012

Broadcast Performance

Vislink’s broadcast products include satellite terminals and wireless communication systems that are used live events such as news, sports, and entertainment.

2012 broadcast revenue was £48.1m, up 2.2% versus 2012. Broadcast revenue accounted for 80.3% of total group revenue, down from 82.3% of total group revenue in 2012.

Revenue from Pebble Beach is not included in these figures.

For the broadcast business, the company’s geographic performance was as follows:

On a percentage basis the company’s best performing region was the Middle East and Africa, where sales jumped 49% versus the previous year.

The UK market decline 19.3% in 2013 after a strong performance in 2012, driven in part by the London Olympics. The company had slight growth in the rest of Europe, and experienced a decline in APAC.

2013 broadcast revenue in the Americas was down 10.1% versus 2012. Vislink attributed this decline to cyclicality, saying “the US broadcast marketplace typically sees a reduction in spend in a post presidential election year.” At the same time however, the company specifically highlighted the importance of South America, saying that the 2014 World Cup and 2016 Olympics have provided “an impetus for further investment in both broadcast and surveillance.”

Vislink said the key benefits of Pebble Beach are leading software technology, recently developed next generation products, a growing customer base, and strong cash generation and growth prospects.

The company said the acquisition of Pebble Beach “fits perfectly with Vislink’s desire for growth, recurring revenues, extending its reach and providing customers with synergies, from capturing video to interactive programming, including acquisition and revenue generation. Vislink plans to grow its software capability around the Pebble Beach Systems and management team.”

Move to AIM Market Eases Burden of Future M&A

Following on from the recent acquisition of Pebble Beach, Vislink telegraphed its intention to do more M&A deals in the future, saying the company will “continue to seek growth opportunities both organically and through acquisitions, with a clear underlying objective of continuing to grow shareholder value.”

“We remain on track for our plan to grow the business to £80m, and £8.0m adjusted operating profit by the end of FY 2014, and we intend to support this by way of a number of “bolt on” acquisitions,” said Vislink chairman John Hawkins.

Significantly, during 2013 Vislink switched its stock market listing to the UK’s AIM exchange, the London Stock Exchange’s international market for smaller growing companies. Vislink says that the move to the AIM exchange will “simplify and reduce the financial burden of making acquisitions.”

Strategy and Outlook:

The company said its “markets continue to be tough but as long as we continue to balance our revenues and maintain our product leadership, the group will grow profitably.”

Vislink said it plans to expand its capability in delivering recurring revenues by exploiting its “newly acquired software capability in video playout” (Pebble Beach), and will grow our services offering by developing our network capabilities in cellular and hybrid application areas.

Vislink finished the year with $6.1m (£3.7m) in cash, down from $13.4m (£8.1m) at the end of 2012. The company said it has more than 250 employees worldwide.

Vislink announced that it has acquired playout automation specialist Pebble Beach Systems for $24.7m (£14.9m). Pebble Beach will operate as a stand-alone unit within Vislink, and will continue to be run by its management, including founder Peter Hajittofi.

Under the terms of the deal, Vislink will pay £12.9m in cash, and £2m in newly issued Vislink shares. Pebble Beach management must hold the new shares for at least two years. Vislink says the “transaction will be immediately earnings enhancing.”

For the fiscal year ended June 20, 2013, Pebble Beach had revenue of £5.64m, EBITDA of £1.3m, and profit before tax of £1.3m. Thus the deal values the company at approximately 2.5x revenue, and 11.4x EBITDA. After backing out the £5.9m in cash Pebble Beach had in the bank, the net price paid by Vislink was £9m, valuing the deal at approximately 1.6x revenue and 7x EBITDA.

Vislink, which recently moved its listing to the UK AIM market, has long-telegraphed telegraphed its intention to buy companies to achieve its stated goals for revenue growth and profitability.

In its most recent half-yearly results, company management said “we remain on track to grow the business to achieve turnover of £80m and £8m adjusted operating profit by the end of FY2014, and we intend to support this by a number of bolt on acquisitions in addition to achieving organic growth.”

However, it is interesting to note that Vislink decided to buy a company in a different part of the broadcast value chain to help it achieve its stated intentions.

Vislink, which owns the Advent, Gigawave, Link, MRC, and PMR brands, is best known for its RF, microwave, and satellite communication products that are used by broadcasters in live production environments such as news and sports.

Pebble Beach products are used in broadcast playout applications, which does not have the same emphasis on live events.

Having said that, Vislink says that the Pebble Beach team will “assist Vislink in expanding its software capability as a Group,” so the acquisition could be the first of several deals that mark the beginning of a new business focus at Vislink.

Vislink explained the rationale for the deal saying Pebble Beach’s technology is complementary to its own, and that “the acquisition of Pebble Beach will move Vislink into the provision of software solutions for playout with advanced software technology,” and that “Vislink will now be able to offer broadcasters a complete ‘scene to screen’ solution.” Vislink also highlighted the fact that Pebble Beach “will gain from access to significantly increased sales channels through the global network of over 900 broadcasters that Vislink works with as well as its international network of offices.”

“The acquisition fits perfectly into our long term strategy of acquiring software and services capability that we hope to drive recurring revenues for the group,” said Vislink chairman John Hawkins.

UK-based Pebble Beach has 60 employees, and regional offices in Dubai, Singapore, and the USA.

I am pleased to announce that the 2012 Big Broadcast Survey (BBS), our annual study of the broadcast market, has been completed and that the reports from this project will be published soon.

We once again had record-breaking participation in this project. Almost 10,000 broadcast professionals in 100+ countries participated in the 2012 BBS, making it the largest ever and most comprehensive market study of the broadcast industry. We are humbled by and grateful for the unprecedented participation from so broadcast industry professionals who took the time to contribute to this year’s study.

We created the BBS to help our clients, and readers of this website, better understand the issues and trends impacting the broadcast and digital media industries. We received many positive comments about the BBS from both participants and our research clients, so we feel that we are on the right track and we will continue to publish data about the market on a regular basis.

We will begin to post summary data from the 2012 study on this website, so please check back regularly.

I will also be presenting a summary of the 2012 data on Sunday April 15th at the NAB Show, at a half-day conference session called Media Technology: Strategy and Valuation, which is being produced by Devoncroft, Silverwood Partners and the NAB Show. It’s free for all registered NAB Show attendees, so please come along.